Vietnam could benefit most in Asia from US-China trade war: experts

Vietnam is taking advantage of trade tensions to boost the nation’s profile as a manufacturing and export powerhouse, selling everything from shoes to smartphones (Illustrative image. Source: VNA)

Hanoi (VNA) – The business news website Bloomberg has run an
article explaining why Vietnam could get the most benefits among Asian nations from
the US-China trade conflict.

The article titled “Why Vietnam could be Asia’s
biggest trade war winner” quoted a senior economist at Natixis in China’s Hong
Kong as saying “Vietnam is poised to capture some of China’s global market
share in labour-intensive manufacturing”.

Vietnam is taking advantage of trade tensions to
boost the nation’s profile as a manufacturing and export powerhouse, selling
everything from shoes to smartphones. Trade amounts to about twice its gross
domestic product - more than any country in Asia apart from Singapore, the
economist said.

The article also looks at what makes Vietnam
attractive to foreign investors.

Production workers in Vietnam are paid an
average of 216 USD a month, less than half what their peers get in China.
Thanks to government subsidies, electricity is also cheaper than in Indonesia
and the Philippines, according to GlobalPetrolPrices.com’s June data.

Vietnam also has one of the largest labour
forces in Southeast Asia, at 57.5 million. That compares with 15.4 million for
Malaysia and 44.6 million for the Philippines, according to the World Bank.

Regarding trade deals, Vietnamese leaders have
pursued free trade agreements with the Republic of Korea and Europe and signed
the Comprehensive and Progressive Agreement for Trans-Pacific Partnership
(CPTPP) in March this year.

Vietnam completed a trade deal with the EU in
June that will eliminate almost all tariffs. In Southeast Asia, only Singapore
has a similar agreement with the EU.

Vietnam’s government is also making it easier
for foreign investors to do business with a proposed securities law allowing
100 percent foreign ownership of public companies, except those in restricted
sectors like banking and telecommunications.

Foreign direct investment (FDI) in Vietnam is surging, with
the government expecting disbursed FDI to rise to a record 18 billion USD this
year.

Vietnam’s proximity to China also adds to its
appeal, according to the article.
Chinese companies that need raw materials or product
components from the US will find it easier to source these goods via Vietnam.

In addition, Vietnam is China’s largest trading
partner in Southeast Asia.

Vietnam boasts one of the world’s
fastest-growing economies, forecast to expand at about 7 percent this year. The
dong has been relatively stable in 2018, compared with other currencies in
Asia.

“Strong economic growth and political stability
are very important to investors,” said Tony Foster, the Hanoi-based managing
partner in Vietnam for law firm Freshfields Bruckhaus Deringer LLP.

Relating to this topic, Erik Lundh, senior
economist of the Conference Board, a non-profit independent economy research
organisation in the US, told Vietnam News Agency correspondents in the US that
many multinational groups which previously depended on China have considered
building manufacturing workshops in countries like Vietnam because of the
labour cost advantage and fewer risks posed by the US-China trade war.

According to the expert, to succeed like China
over the past two decades, Vietnam should aim to become a high-tech
manufacturing destination and focus on developing high quality human
resources.-VNA